There are steps anyone can take to boost a low credit score. But keep in mind, there’s really no quick fix. MyFICO.com describes it best: improving your credit score is a little like losing weight – it happens slow and steady over time.
Do a Credit Check
The first step to improving credit is checking it. Use the website AnnualCreditReport.com, which was created by the three national credit bureaus to comply with a federal law allowing consumers to access their credit reports. There, everyone is entitled to one credit report each year from each of the three major bureaus – Equifax, TransUnion and Experian.
Unlike other “free” credit report websites, the site does not require membership in a paid credit monitoring program. The site also doesn’t use personal information for marketing purposes. But only the actual credit report is free – there’s a small fee required to see the numerical score.
Challenge Any Wrong Information
Inaccuracies on credit reports are more common than most people think. Check to make sure creditors aren’t incorrectly reporting late payments or delinquencies, or including information that’s more than seven years old. Each of the three credit bureaus allows consumers to challenge anything they believe shouldn’t be there with just a few clicks on the website.
Get Current and Stay Current
Sure, this is easier said than done. But paying bills on time is really the best way to boost a low credit score. Quick fixes like opening a bunch of new credit card accounts to increase the amount of available credit could backfire.
For those who simply forget to make payments on time, try setting up automatic bill payments. The money will be deducted from the bank like clockwork each month, eliminating even the possibility of late payments.
If the issue has more to do with financial problems, MyFICO.com suggests contacting creditors to talk about payment options or visiting a legitimate credit counselor (usually a nonprofit agency). Sometimes creditors are willing to temporarily lower or suspend payments due to a financial hardship. If they’re not, a credit counselor will have better bargaining power.
Keep Credit Card Balances As Low As Possible
It’s important to have credit cards, but it doesn’t look good if they’re all maxed out – or even close to it. Creditors use a calculation known as debt-to-credit ratio to determine a consumer’s creditworthiness. The closer a person’s total accumulated debt is to the total amount of credit available, the lower a credit score can go. If at all possible, experts recommend paying credit card balances in full each month. If that’s not feasible, they recommend paying as much as a monthly budget allows.
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